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Explain how hedging can i) reduce firms potential financial distress, and ii) alleviate firms underinvestment problem. Secondly, explain how firms hedging activities can be driven

Explain how hedging can i) reduce firms potential financial distress, and ii) alleviate firms underinvestment problem.

Secondly, explain how firms hedging activities can be driven by agency problem. Please cite the empirical papers in support of these theories.

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